Thank you for reading the news about Tech giants, the digital taxman cometh and now with the details
Aden - Yasmine El Tohamy - Seeking a united front, OECD is developing global rules to make bellwethers pay tax where they do business
Leading world economies must show unity in dealing with aggressive "tax optimisation" by global digital giants like Google, Amazon and Facebook, G20 officials said on Saturday.
Global rules are being developed by the Organisation for Economic Cooperation and Development to make digital firms pay tax where they do business, rather than where they register subsidiaries. The OECD says this could boost national tax revenues by a total of $100 billion a year.
The call for unity appeared mainly directed at the US, home to the biggest tech companies, in an attempt to head off any stalling on the rules until after the US presidential election in November.
"There is no time to wait for elections," German Finance Minister Olaf Scholz told a tax seminar on the sidelines of a meeting of G20 finance ministers and central bankers.
"This needs leadership in certain countries," Scholz said, looking directly at US Treasury Secretary Steven Mnuchin, sitting next to him at the seminar.
The taxing of digital firms and the effect of the coronavirus outbreak on the global economy are among the hot topics being debated by G20 financial leaders, from the world's 20 largest economies, during their talks in Riyadh this weekend.
The OECD wants to set a minimum effective level at which such companies would be taxed and seeks agreement by the start of July, with an endorsement by the G20 by the end of the year.
"A coordinated answer is not the better way forward, but, given the alternatives, the only way forward," OECD head Angel Gurria told the seminar.
But the OECD efforts were stalled late last year by last-minute changes demanded by Washington, which many G20 officials view as reluctant to deal with a potentially politically-tricky matter before the presidential election.
Mnuchin said OECD countries were close to an agreement on the minimum tax level, which he said would also go a long way to resolving the issue of where tax is payed.
"I think we all want to get this done by the end of the year, and that's the objective," Mnuchin told the seminar.
Mnuchin sought to reassure G20 delegates that a US proposal to add a "safe harbour" regime to the tax reform effort - which has drawn criticism from France and other countries - would not let companies simply opt out of paying taxes.
"It's not an optional tax," he said. "You pay the safe harbor as opposed to paying something else. People may pay a little bit more in a safe harbor knowing they have tax certainty."
US officials say their proposal would allow a multinational enterprise to elect to pay more foreign tax in exchange for enhanced tax dispute resolution benefits and administrative relief. But many questions remain.
More clarity needed
French Finance Minster Bruno Le Maire told reporters it remained unclear exactly what the US proposal would entail.
"We're still in the process of assessing what it really means," he said, adding: "It's not a non-starter for the French government. It's fair and useful to give all the attention to this new proposal."
European Union Economy Commissioner Paolo Gentiloni told Reuters there was still hard work ahead.
"It's good that there is a commitment to find a solution, but ... it's not there," he said, adding that he would meet with Mnuchin for bilateral talks later on Saturday.
Scholz told reporters Germany remained sceptical. "I think we shouldn't start with letting companies choose which taxes they want to pay. This is leading to nowhere," he said.
Several European countries, including France, Spain, Austria, Italy, Britain and Hungary either already have a plan for a digital tax or are working on one, creating the risk of a highly-fragmented global system.
"You cannot have in a global economy different national tax systems that conflict with each other," Mnuchin said.
Facebook chief executive Mark Zuckerberg said on February 14 he would be ready to pay more tax in Europe and would welcome a global OECD solution that would make the levies uniform.
These were the details of the news Tech giants, the digital taxman cometh for this day. We hope that we have succeeded by giving you the full details and information. To follow all our news, you can subscribe to the alerts system or to one of our different systems to provide you with all that is new.
It is also worth noting that the original news has been published and is available at Khaleej Times and the editorial team at AlKhaleej Today has confirmed it and it has been modified, and it may have been completely transferred or quoted from it and you can read and follow this news from its main source.